SD Senate health committee approves setting up savings fund prepping for potential Medicaid expansion
While stressing a statewide ballot measure to expand Medicaid could soon pass, bill's sponsor wants state to be required to pay state's share from special fund and not redirect federal money to a "campground in Winner."
PIERRE, S.D. — Senators on a health committee on Friday, Feb. 4, were nearly unanimous in approving a rainy day fund for potential Medicaid expansion by voters.
In stumping for Senate Bill 102 , Sen. Wayne Steinhauer, R-Hartford, didn't overtly advocate for or against expanding the federal low-income health care program. But he said the expansion is coming down the road and wants the state's coffers to be ready.
"That'd be kind of a shock to our financial system," said Steinhauer, estimating the state's "run-rate" share to be north of $22 million, after the federal contribution wanes after five years.
The American Rescue Plan Act of 2021 (ARPA), signed into law by President Joe Biden, upped the federal share of paying for expansion of Medicaid, which would cover medical costs for people living under 138% of the poverty line.
The federal government would pay roughly 90% of the expansion, estimated to cost $279 million. But states still carry costs, including operational expenses, for picking up a potential 42,000 new clients, according to an analysis by the Legislative Research Council .
Under Steinhauer's plan, a new fund in the state treasury would collect "any savings" gleaned from ARPA. Those new dollars could only be spent on Medicaid expansion costs, not other state priorities.
"Not that I have anything against a campground in Winner," Steinhauer said. "But we might end up building a campground in Winner [with the ARPA funds], and we need it to take care of people who need it the most."
The proposal was backed by supportive remarks from a range of state lobbies, including health care, education, and the municipal league.
"From an economic point of view it totally makes sense," said Dean Krogman, on behalf of the South Dakota Medical Association. "We're talking about a group of people that are sometimes labeled 'the working poor.' But health care for them is important to business and to them personally."
David Owens, with the South Dakota Chamber of Commerce and Industry, noted his organization has yet made a decision to endorse Medicaid expansion but thought the bill was financially prudent.
"The argument is," Owens said, "that the federal government's going to pull the rug out from underneath us, and then we'll be stuck with the bill."
He said to opponents: "You want this bill."
Matt Flett, a representative from the Bureau of Finance & Management, argued against the necessity of a fund, saying "it'll eventually run out of money" and create a "structural budget deficit."
He observed the bill was "premature and unnecessary."
Similarly, Lisa Nolen, deputy state director for the Americans for Prosperity, argued against the measure as clipping the state's fiscal flexibility with the flush of federal money.
"This is a one-size-fits-all government solution," Nolen said. "And we think there are better ways to spend the funds that'll help people here in South Dakota."
Ultimately, however, the committee — many of whom are cosponsors of SB 102 — appeared already swayed.
Before the vote, Steinhauer observed "I think there's just a little resistance on second floor [the governor's office] to Medicaid expansion."
The bill, which was approved on a 5-1 vote, now moves to the Senate floor for consideration.
A statewide ballot question will appear before South Dakotans this coming November about whether to make South Dakota — long a Medicaid holdout — one of the last states to expand the pool of eligibility under the federal program. A separate bill, Senate Bill 186, has also been brought by Steinhauer to expand eligibility via the Legislature.